The Determinants of Capital Buffer in the Turkish Banking System

International Business Research Journal, Vol 6, No 1, 2013, pp. 224-234

11 Pages Posted: 25 Jan 2013

See all articles by Gonca Atici

Gonca Atici

Istanbul University

Guner Gursoy

Istanbul Kemerburgaz University

Date Written: December 13, 2012

Abstract

The purpose of this study is to analyze the determinants of capital buffer in the Turkish Banking system and to estimate the cyclicality of capital buffer using a panel data of 87 banks covering the period 1988-2009. The data is based on the reports published by the Banks Association of Turkey. Two-step Generalized Method of Moments is implemented by using Arellano–Bond linear dynamic panel-data estimator. The study is focused on: i)economic growth, ii) asset size, iii) return on equity and iv) non-performing loans as the determinants of capital buffer. It is observed that commercial banks, including the banks under the control of Savings Deposit and Insurance Fund, move procyclically, where commercial banks, excluding the banks under Savings Deposit and Insurance Fund, fluctuate countercyclically. This finding is noteworthy since it is parallel to BASEL III, where structuring a countercyclical capital framework is emphasized.

Keywords: capital adequacy, capital buffer, banking sector, business cycle

Suggested Citation

Atici, Gonca and Gursoy, Guner, The Determinants of Capital Buffer in the Turkish Banking System (December 13, 2012). International Business Research Journal, Vol 6, No 1, 2013, pp. 224-234, Available at SSRN: https://ssrn.com/abstract=2206308

Gonca Atici (Contact Author)

Istanbul University ( email )

Istanbul Business School
Avcilar Campus
Istanbul, 34322
Turkey

Guner Gursoy

Istanbul Kemerburgaz University ( email )

Mahmutbey Dilmenler cad No 26
Bagcilar
Istanbul
Turkey

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